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‘Our economy has been hit hard’: Budget deficit blows out to record $85.3b

The federal government has revealed a record deficit of $85.3 billion for 2019-20 following massive government spending to help struggling households and businesses get through the coronavirus pandemic.

Last financial year’s budget deficit surpasses the previous record of $54.5 billion in 2009-10 following stimulus measures from the Rudd government to help Australia weather the global financial crisis. In 2008-09, the deficit reached $27 billion.

Treasurer Josh Frydenberg: "This is a half a billion improvement from what was estimated in terms of the deficit, but a $93 billion deterioration forecast [from] the end of the last year."

Treasurer Josh Frydenberg: “This is a half a billion improvement from what was estimated in terms of the deficit, but a $93 billion deterioration forecast [from] the end of the last year.”Credit:Alex Ellinghausen

Treasurer Josh Frydenberg said on Friday morning the Australian economy had performed well in the lead-up to the crisis, with unemployment down to 5.1 per cent in February.

“Notwithstanding this strength coming into the crisis, our economy has been hit hard,” Mr Frydenberg said. “The underlying cash balance was a deficit of $85.3 billion, or 4.3 per cent of GDP, compared to the forecast surplus of $5 billion, or 0.3 per cent of GDP at [the mid-year update],” he said.

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